Consumer Efforts Worry Retailers

By Faye MergelPublished: Tuesday, October 6th, 2009

Consumers are making extra efforts in beefing up their credit scores and taking care of their credit reports but that leaves retailers worrying. Small and large scale sellers noted that Americans are on the defensive and are not spending as much as they used to.

Last August, shoppers trimmed their back-to-school buying in an effort to stay debt-free. This caused retail sales to drop for the twelfth consecutive month. During the same month in 2008, net sales were at $1.14 billion but figures fell down by 2% to $1.12 billion. Economic analysts predict another decline in sales as another holiday approaches.

The National Retail Foundation (NRF) projects another fall in spending this Halloween. The trade groups says that consumers will be spending only about $56.31 this Halloween, a two digit decline from last year’s average spending of $66.54. Overall, consumers are expected to spend $4.75 billion.

According to a survey by NRF, 29.6% of Americans say that they will have to cut off on their Halloween spending this year due to the sluggish economy. This means that nothing can keep Americans from celebrating, but they will have to do it on a tighter belt, according to consumer behavior analysts. They also noted that Americans have been more conscious of the impact that borrowing can do on their financial future. Experts say that consumers have been more mindful their credit reports because of the interest rate hikes. Creditors have tightened lending standards which is another reason for the more frugal attitude of consumers.

The International Council of Shopping Center predicts a 1% increase in this year’s Christmas spending, but that is not enough to ease retailers since that would still be the weakest holiday sales in nearly 40 years. However, America’s Research Group is on a more positive note. The private researching and planning firm predict a 3.5% increase in spending this year which means that consumers will spend about $151 more than they did in 2008.

Another group, Javelin research, says that shoppers are likely to respond positively to the increase in credit limits. They noted that as limits were cut, many were forced to set their cards aside and restrict their borrowing. Now that creditors have given them more space, Americans are most likely to use their cards more often, experts say.

Meanwhile, specialists advise shoppers not to rack up too much debt since they may not be able to pay them back. They remind consumers that late and delinquent payments are huge blemishes to a credit report.

Consumers are making extra efforts in beefing up their credit scores and taking care of their credit reports but that leaves retailers worrying. Small and large scale sellers noted that Americans are on the defensive and are not spending as much as they used to.

Last August, shoppers trimmed their back-to-school buying in an effort to stay debt-free. This caused retail sales to drop for the twelfth consecutive month. During the same month in 2008, net sales were at $1.14 billion but figures fell down by 2% to $1.12 billion. Economic analysts predict another decline in sales as another holiday approaches.

The National Retail Foundation (NRF) projects another fall in spending this Halloween. The trade groups says that consumers will be spending only about $56.31 this Halloween, a two digit decline from last year’s average spending of $66.54. Overall, consumers are expected to spend $4.75 billion.

According to a survey by NRF, 29.6% of Americans say that they will have to cut off on their Halloween spending this year due to the sluggish economy. This means that nothing can keep Americans from celebrating, but they will have to do it on a tighter belt, according to consumer behavior analysts. They also noted that Americans have been more conscious of the impact that borrowing can do on their financial future. Experts say that consumers have been more mindful their credit reports because of the interest rate hikes. Creditors have tightened lending standards which is another reason for the more frugal attitude of consumers.

The International Council of Shopping Center predicts a 1% increase in this year’s Christmas spending, but that is not enough to ease retailers since that would still be the weakest holiday sales in nearly 40 years. However, America’s Research Group is on a more positive note. The private researching and planning firm predict a 3.5% increase in spending this year which means that consumers will spend about $151 more than they did in 2008.

Another group, Javelin research, says that shoppers are likely to respond positively to the increase in credit limits. They noted that as limits were cut, many were forced to set their cards aside and restrict their borrowing. Now that creditors have given them more space, Americans are most likely to use their cards more often, experts say.

Meanwhile, specialists advise shoppers not to rack up too much debt since they may not be able to pay them back. They remind consumers that late and delinquent payments are huge blemishes to a credit report.